The Rise of Chipotle Mexican Grill: Earnings Report and Business Outlook

Key Takeaways

• Chipotle Mexican Grill is set to report earnings after markets close Wednesday, with analysts projecting revenue and profit to rise year-over-year.
• The company completed a massive 50-for-1 stock split last month, and its stock has trended lower in the days since.
• Baird analysts wrote Sunday that the fast casual chain is “well-positioned” to perform despite an “otherwise difficult consumer spending backdrop.”

Chipotle Mexican Grill (CMG) reports its latest quarterly results after the bell Wednesday, with analysts expecting revenue and profits to rise year-over-year in the chain’s first earnings result since its 50-for-1 stock split last month.

Analysts expect Chipotle’s revenue to rise 17% from year-over-year to $2.94 billion, with profits projected to rise about 28% to $437.8 million, according to estimates compiled by Visible Alpha.

Baird analysts wrote Sunday that they believe the chain is well-positioned to continue posting earnings beats despite an “otherwise difficult consumer spending backdrop” that has affected much of the economy, including some of Chipotle’s competitors.

However, the Baird analysts noted that some indicators show demand “softening” earlier this month.

Key Metric: Comparable-Store Sales

Chipotle’s last two quarterly results have been lifted by higher comparable-store sales, thanks to higher prices and increased foot traffic. Baird analysts wrote that the company’s results should continue to be boosted by Chipotle’s “strong and improving value proposition.”

The analysts noted that while Chipotle has raised prices, it has done so at a lower rate than most of the industry: The analysts found that the cost of a chicken burrito, the chain’s most popular item, has risen at a slower rate than the consumer price index’s (CPI) “food away from home” inflation pace over the last decade.

Business Spotlight: Performance Since Split, Announces CFO Retirement

The company announced earlier this month that longtime Chief Financial Officer (CFO) Jack Hartung is retiring next year, with his replacement, current Vice President of Finance Adam Rymer, set to assume the position in January. Hartung, who has been Chipotle’s CFO since 2002, will stay with the company through March.

Chipotle completed its 50-for-1 stock split last month. The company said it wanted to make the stock more accessible to employees and a wider range of investors.

Shares of Chipotle were little changed Monday. They have moved almost 20% lower since the split took effect June 26.

Overall, Chipotle Mexican Grill is poised for continued success in the fast-casual dining sector. With strong earnings projections and a focus on value for customers, the company remains a top contender in the industry. Investors and consumers alike will be eagerly awaiting the latest earnings report to see how Chipotle continues to thrive in a challenging economic environment.

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